Would You Pay a Quarter for Someone Else's Insurance?

The case against the Affordable Care Act rests on the premise that the free market can better provide health insurance to the nation's 54 million uninsured than a government program can. But what does it mean if many of the same people who oppose Obamacare also object to the cost of covering more people through the market?

A telephone survey by Bankrate.com asked 3,496 people how they would react if a business tacked on an extra 25 cents to every bill to help cover the cost of health insurance for its employees. Among Democrats, 70 percent said they would approve; 11 percent said they'd disapprove but would keep doing business with it anyway. Just 12 percent said they'd stop patronizing that business:

When Republicans were presented with the 25 cents idea, however, a plurality -- 35 percent -- said they would respond by taking their business elsewhere. An additional 17 percent said they would disapprove but would keep using the business, while 34 percent said they approved of the extra charge.

Here's what makes that a head-scratcher: The vast majority of Republican respondents -- 78 percent -- also told questioners that Obamacare should be repealed. So a significant portion of Republicans don't think the government should pay for people's health insurance, but they are not willing to pay even a small amount more so that those people can get covered through their employer.

Which leads to a puzzling question: How, exactly, are these people supposed to get insurance?

Two caveats apply here. First, several restaurants in a Florida chain made the news in February for applying what they called an Affordable Care Act surcharge of 1 percent to customers' bills. The restaurants said the surcharge was needed to help pay for health care for their employees, as the law mandates. Some respondents to the survey may have had that story in mind; their objection to the extra charge might therefore have been intended as a rejection of Obamacare.

But whether a business attaches an incendiary name to its higher prices or simply imposes them and hopes most customers won't notice, the result is the same: The money used to pay for employer-sponsored insurance comes from revenue, just like every other cost that businesses face. Covering more people through the employer-based system, whatever the impetus, means charging higher prices. (If anything, repealing the law's other coverage expansions, such as the expansion of Medicaid and the subsidies for private insurance on the individual market, would make employers the only potential source of health insurance for even more people. That means that expanding health coverage would lead to still greater increases in prices.)

Second, covering employees' health insurance costs a lot more than 25 cents per transaction at all but the highest-volume businesses. The average employer-sponsored health plan cost $16,351 in 2013, according to the Kaiser Family Foundation; of that, $11,786 was paid by the business. That's a lot of quarters.

So the sentiment being measured in this survey isn't people's willingness to cover the actual cost of employer-based coverage. Rather, it's their reaction to the idea of paying more, even a nominal amount, for other people's insurance. And a sizable portion doesn't want to.

How should we make sense of that? One explanation, certainly, is that some respondents didn't realize that if you cross off Obamacare and employer-based insurance, there aren't a lot of options left for expanding coverage. (Try buying unsubsidized insurance on the individual market while making minimum wage.)

But hanging public preferences on a lack of knowledge alone is too easy; it ignores the real concerns those preferences reflect. Another explanation is that the recession has made some Americans more reluctant to part with what's theirs for the benefit of others, regardless of whether the vehicle for that redistribution is government or business.

That's a harder challenge for policy makers, because the only solution is a return to real median wage growth. Unfortunately, that's a problem that can't be addressed with legislation -- or extra quarters.

To contact the writer of this article: Christopher Flavelle at cflavelle@bloomberg.net.

To contact the editor responsible for this article: Stacey Shick at sshick@bloomberg.net.

Christopher Flavelle writes editorials on health care, economics and taxation. He was previously a senior policy analyst for Bloomberg Government. He also covered the 2009 stimulus package for ProPublica.
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